Import Letter of Credit Quick Reference Guide

Import Letter of Credit 1

Establish an Import Letter of Credit

1. In the left menu panel, select Letters of Credit > Import LC > All to display the Transactions grid.

2. Complete 1. Parties information.

▪ Enter your applicant reference number for the LC.

▪ Applicant and Account party fields will default to your company.

▪ If you want the LC to be transferable, select This letter of credit (LC) is transferable.

▪ Select the Beneficiary and the Beneficiary bank.

▪ Please ensure that full address of Beneficiary, Beneficiary Bank along with the SWIFT code of the Beneficiary Bank is provided.

▪ Select Confirmation instructions to advising bank.

3. Complete 2. Payment information.

▪ Select Currency.

▪ Enter Amount.

▪ If tolerance is required, select type, then enter the percentage of tolerance or the amount.

LC Type First Step

Create a completely NEW LC ▪ Click Create new.

Create a SIMILAR LC ▪ Select the required (released) LC to base your new LC on then click

Create similar.

Create using a TEMPLATE ▪ Select Template in the Status field, click Update list.

▪ Note: Clear start date to find templates created more than 4 weeks ago.

▪ Select required LC template then click Create similar.

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▪ Complete Payment terms.

o Select if the LC is Sight or Term.

o For a Sight LC, select Sight and go the Expiry terms section.

▪ For a Term LC, select Term and the Tenor period, then enter the optional Tenor date and Tenor days.

▪ If required, click Additional tenor details and add information on the multiple tenors. The Tenor date or Tenor days fields should reflect the latest date.

▪ Complete Expiry terms.

o Select Expiry date. The date should equal the Latest shipment date (if this is entered on the next

screen) plus the Document presentation period.

o Select Place of expiry.

o If required, enter Document presentation period (days) and Document presentation period (text). For example, “AFTER SHIPMENT DATE”, “AFTER B/L DATE”, “AFTER INVOICE DATE”.

4. Complete 3. Shipping information.

▪ Select Latest shipment date.

▪ Select Shipping incoterm.

▪ Select Partial Shipments option and Transhipment option.

▪ Complete Shipping details.

▪ Complete the Details of charges.

5. Complete 4. Goods Description.

▪ Enter the Description of goods, by using a phrase or typing the description.

▪ Select a phrase and click the red arrow to move it across. Click (“+”) to add a new phrase/text.

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6. Complete 5. Documents & additional conditions.

▪ Select Documents required for the LC. Click (“+”) to add a new phrase/text.

▪ Select Additional conditions for the LC. Click (“+”) to add a new phrase/text.

▪ Select any Special payment conditions for beneficiary. Click (“+”) to add a new phrase/text.

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7. Check that you have green traffic lights for all tabs.

8. Open Actions, click Save. The transaction now needs to be checked and approved before it is sent to the bank.

Pay a Sight LC without discrepancies

1. Select the Import LC grid with the Transactions tab displayed.

2. Select the LC to be paid.

3. Click Edit/amend to open the transaction.

4. On 1. Summary tab, review details of transactions. Discrepancies will be blank as this LC is clean i.e. no discrepancies.

5. Select 2. Acceptance tab.

▪ ‘Accept’ will be selected by default as there are no discrepancies.

▪ Select the Disposal of documents method.

▪ Select the Account to debit charges from. If none selected, the charges will be deducted from the same account as the proceeds.

6. Select 3. Payment tab.

▪ Enter the payment instructions. ▪ Select New and nominate the account.

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▪ If currency conversion is needed, select New. ▪ Enter foreign exchange instructions in the Edit foreign exchange instruction window. Click Save.

▪ If finance is required, click New in the Advances request section. ▪ Complete the Edit advances request, then click Save.

▪ Review all details on the 3. Payments tab. If no revisions are required, save the payment.

7. Open Actions, click Save. The transaction is ready for final review and approval.

Sight LC with discrepancies

You need to advise the bank whether a Sight LC with discrepancies will be Accepted or Dishonoured.

1. Select the Import LC grid with the Transactions tab displayed.

2. Select Sight LC you are providing advice on:

▪ The transaction will have a Discrepant-payment (*) +D type and an In process status.

▪ D indicates there are discrepancies with the Import LC.

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3. Click Edit/amend to open the LC.

4. View the 1. Summary tab, click Discrepancies to view the pop-up box, then click Close.

5. Select 2. Acceptance tab.To advise whether a Sight LC with discrepancies will be Accepted:

▪ Choose Accept.

▪ Choose Disposal of documents and provide Account to debit charges.

▪ Then proceed to 3. Payment tab and refer to the above section Pay Sight LC without Discrepancies.

▪ Proceed to Approval of transaction.

OR to advise whether a Sight LC with discrepancies will be Dishonoured:

▪ Choose Refuse, then enter the reasons in the Additional Instructions field. Please note that all details in

Payment tab will be disabled.

6. Open Actions, click Save.

▪ The transaction is now ready for approval.

▪ If the LC was refused, the instructions still need to be approved so they are sent to the bank.

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View Term LC without discrepancies

1. Select the Import LC grid with the Transactions tab displayed.

2. Select the Term LC. The Term LC without discrepancies will be released and displayed on the grid as Accepted. You do not need to ‘Accept’ as the documents comply with the Terms & Conditions of the LC.

3. Review the 1. Summary tab

4. Review the 2. Acceptance tab. You can view the transaction and check the images of the documents attached. Documents will be posted as per your disposal instructions.

5. After review, open Actions and click Close.

Term LC with discrepancies

You need to advise the bank whether a Term LC with discrepancies will be Accepted or Dishonoured.

1. Select the Import LC grid with the Transactions tab displayed.

2. Select term LC you are providing advice on.

▪ The transaction will have a Term payment +D type and an In process status.

▪ D indicates there are discrepancies with the Import LC.

3. Click Edit/amend to open the LC.

4. View the 1. Summary tab, click Discrepancies to view pop-up box, then click Close.

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5. Click 2. Acceptance tab, select click Accept or Refuse the Discrepancies noted for this drawing.

To advise whether a Term LC with discrepancies will be Accepted:

▪ Choose Accept.

▪ Choose Disposal of Documents and provide Account to debit charges. Then proceed to Approval of the transaction.

OR to advise whether a Term LC with discrepancies will be Dishonoured:

▪ Choose Refuse.

▪ For refuse, enter reasons in the Additional Instructions field. Please note that all details in Payment Tab will be disabled. Then proceed to Approval of transaction.

7. Open Actions, click Save.

▪ The transaction is now ready for approval.

Discrepancies not accepted.

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Pay a Term LC

1. Select the Import LC grid with the Transactions tab displayed.

2. Select the Term LC.

▪ The transaction will have a Term Payment type and an In process status, three days before the maturity date.

3. Click Edit/Amend to open the transaction.

4. Review the 1. Summary tab information and check accuracy.

5. Select 2. Acceptance tab.

▪ Select the Account to debit charges. If none selected, the charges will be deducted from the same account as the proceeds.

▪ Enter other additional instructions in the Additional Instructions field, e.g. if payment is made by a method other than from an account.

6. Select 3. Payment tab.

▪ Enter the payment instructions, then select New to nominate the payment account. Note – payment can be made from up to six accounts.

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▪ If currency conversion is needed, select New and enter foreign exchange instructions in the Edit foreign exchange instruction window.

▪ If finance is required, click New in the Advances request section.

▪ Review all details on the 3. Payments tab. If no revisions are required, move on to save the term payment.

7. Open Actions, click Save. The transaction is ready for final review and approval.

Approve an LC payment

There are two ways to approve a Sight or Term LC payment.

▪ With review (highly recommended) – review and ensure the details of the payment/transaction are correct before approving and sending to the bank.

▪ Without review – select the check-box in front of application. Open Actions, click Save and approve and enter your password in the Approve transaction window. When selecting the check box, the ‘Approve’ button becomes active and there is no ‘Approve’ option under More actions.

1. Select the Import LC grid with the Transactions tab displayed.

2. Click the Applicant’s reference link of the term payment to be approved. The transaction will have an In process status.

3. Review the 3. Payment tab and check all details.

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4. Open Actions, click Save and approve and enter your password in the pop-up Approve transaction screen. The transactions status will change to Sent to bank.

Approve a Term LC - Discrepancies to be Accepted or Dishonoured

There are two ways to approve the Term LC instructions.

▪ With review (highly recommended) – review and ensure edits and amendments are correct before approving and sending to the bank.

▪ Without review – select the check-box in front of application. Open Actions, click Save and approve and enter your password in the Approve transaction window. When selecting the check box, the ‘Approve’ button becomes active and there is no ‘Approve’ option under More actions.

▪ Note - If the LC was refused, the instructions still need to be approved so they are sent to the bank.

1. Select the Import LC grid with the Transactions tab displayed.

2. Select Term LC with discrepancies to be approved.

3. On the 1. Summary tab, click Discrepancies to view and check them.

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4. Select 2. Acceptance tab and check the details.

Acceptance of discrepancies

Refusal of discrepancies

6. To approve and submit to the bank, open Actions, click Save and enter your password in the pop-up Approve transaction window.

Create an Import LC template

Import LC templates Details

Purpose ▪ A template makes it easier to establish an Import LC for a regular supplier.

Key points ▪ A template needs to be based on a previous transaction that has been released in

the system.

▪ The template will contain all party information, payment and expiry terms (not including a date), dispatch details, additional details and details of charges that were on the original LC. These details can be overwritten.

▪ The following fields will be blank and must be completed each time the template is used:

o Applicant’s reference

o Amount

o Transaction date.

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1. Select the Import LC grid with the Transactions tab displayed.

2. Click the Applicant’s reference link for the transaction you want to use for the template.

3. Open Actions, click Save as template.

4. Enter a template name.

5. Click Save.

▪ The Applicant’s reference will change to the selected template name and the Status will change to Template.

Further information

▪ Refer to the Import Letter of Credit User Guide for detailed process steps and examples.

▪ For Import Letter of Credit reports, refer to the Welcome to WinTrade® User Guide.

Editing or deleting a template

▪ A template can only be edited or deleted by the user that created the template, or Corporate Administrator.